A pretty good month all round for the world’s stock markets as the US (more specifically, US tech stocks) continued to perform strongly.

There were also signs earlier in the month that the US/China trade war could be coming to an end, however by the end of the month things were looking rather precarious again.

State of play – the main world stock market indexes

Region Index Last Month Performance Last 12 Months  Performance
UK FTSE All Share 2.19% 7.09%
US FTSE USA 4.85% 17.62%
Europe FTSE Europe ex UK 2.19% 13.35%
Japan FTSE Japan 3.52% 8.30%
Asia FTSE Asia Pacific ex Japan 0.08% 8.09%

Data sourced from investing.com and up to 27/11/2019.

What’s been going on?

The world stock markets have been driven up by the US once again as the US market hit another record high in November.

Two reasons for this.

Firstly, the bulk of US companies reported quarterly earnings during November and the majority performed better than expected.

Those that did particularly well were the tech stocks, the likes of Apple, Amazon, Microsoft and Alphabet (Google’s parent company). These tech stocks represent a third of the US market so if they do well, it lifts the whole market.

Apple’s new iPhones appear to be selling better than expected and investors are excited about the potential recurring revenue to come from their new services like Apple TV+.

Microsoft beat Amazon to a lucrative $10 billion US defence contract to supply their cloud services. This is big business for the two companies as we store more and more online.

When it comes to Facebook and Alphabet it’s a battle of advertising spending. Facebook’s results were impressive whilst Alphabet’s missed expectations. It appears more people are spending time on social media and therefore companies are spending more and more on social media marketing as opposed to traditional Google ads.

The second reason for the US’s impressive stock market rise was the positive noises coming out of both the US and China that trade tariffs could be relaxed between the two countries.

The whole global market is very keen for this to happen as it has contributed to a general economic slowdown worldwide. But it wasn’t long before President Trump downplayed any progress and in fact the US has now in effect agreed support for Hong Kong’s pro-democracy supporters.

This will anger China especially as tensions continue to rise in Hong Kong with pro-democracy parties beating pro-Beijing parties in 17 out 18 councils at local elections.

In the UK, election campaigning has ramped up and all of the main parties have now released their manifestos. What’s clear is that austerity has ended and whoever gets into power, government spending is certainly going to increase.

The Conservative party appear to be maintaining their lead in the polls which indicates a potential majority for them. However, it is similar to what happened in 2017 when in fact by the time the results came in, the Conservatives had lost their majority.

It was announced that UK inflation fell to 1.5% in October, the lowest level in nearly 3 years. This was partly a result of lower gas and electricity prices thanks to the energy price cap.

There was also a decline in retail sales blamed on consumer confidence as people perhaps start to worry about their money. We saw the demise of two further high street brands as Mothercare went into administration and Mamas & Papas went into pre pack administration.


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Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.